China's Central Bank Launches Credit Repair Initiative to Boost Household Lending

Addressing Sluggish Credit Growth

The People's Bank of China (PBOC) has introduced a one-time credit repair policy aimed at revitalizing household lending in China. The initiative allows individuals with outstanding debts up to 10,000 yuan to have their bad credit records removed from the national credit system, provided they settle their obligations by March 31, 2026. This measure is designed to counteract the significant decline in household borrowing observed in recent months, particularly in November 2025 when new credit fell below market expectations.

Economic Context and Rationale

The credit repair policy comes as China's economy faces challenges, including slowing retail sales and overall economic growth. The PBOC views this initiative as necessary to mitigate the long-term financial impact of the COVID-19 pandemic on households. By clearing bad credit records for individuals who have since settled their debts, the central bank aims to provide these consumers with a fresh start, enabling them to access financial services more easily in the future.

Implementation Details

The policy specifically targets personal debts incurred between early 2020 and end-2025. To qualify for credit record clearance, individuals must ensure they have fully repaid their debts by the deadline set by the PBOC. This measure is expected to not only boost consumer spending and borrowing but also support broader economic recovery efforts by restoring consumer confidence and financial health.